Regional airline Flybe has warned shareholders it will be wound up if they do not accept the terms of an acquisition proposed by Connect Airways.

Connect Airways is a consortium led by Virgin Atlantic and Stobart Air.

The new group initially made a bid for Flybe early last month, offering one pence per share and valuing the company at £2.2 million.

With the formal purchase of shares now beginning, Flybe is warning shareholders they will be left with nothing if the bid fails.

The deal still needs investor approval at a meeting on March 4th.

Flybe acknowledged the offer of one penny per share was “disappointingly low”.

However, it was the only rescue plan on the table, the airline said.

In a statement to markets, Flybe said: “If the sale scheme is not approved, the Flybe directors intend to take steps to wind-up the company and shareholders are likely to receive no value for their shares in Flybe.”

Flybe is Europe’s largest regional airline and flies more UK domestic flights than any other.

The carrier currently operates 190 routes serving 12 countries from 73 departure points in the UK and Europe and is the largest scheduled airline by air traffic movements at Aberdeen, Belfast City, Birmingham, Cardiff, Doncaster Sheffield, Exeter, Glasgow, Isle of Man, Jersey, Manchester, Newquay and Southampton airports.

Flybe operates a fleet of 76 aircraft – 54 Bombardier Q400, six Embraer E195, 11 E175 and five ATR 72s.

It has been hit by rising fuel prices and intense ticket price competition in Europe in recent months, forcing a sale.

“Ongoing fuel and currency impacts presented particularly significant headwinds for Flybe as did the rapid and significant tightening on Flybe’s liquidity from the card acquirer market,” the company said in its filing.

In addition, “general economic outlook and conditions had impacted the business leading to a further weakening in consumer demand, affecting cash, revenues and profit adversely,” the airline said.

On January 15th, to avoid the airline going into administration the Flybe board entered into a separate agreement to sell the operating subsidiaries - the airline and the website - to Connect Airways for £2.8 million.

That sale is expected to be completed by February 22nd, and does not require shareholder approval.